1. (5 Points) You are given the following information: U.S. Philippine Thailand Nominal one year interest rate 5% 9% 7% Spot rate ----- $0.018 $0.028 Interest rate parity exists between the U.S. and Philippine as well as the U.S. and Thailand. The international Fisher effect exists between the U.S. and Philippine as well as the U.S. and Thailand. Noah (based in the U.S.) invests in a one-year CD (certificate of deposit) in Philippine and sells Philippine peso one year forward to cover his position. Mia (based in Thailand) invests in a one-year CD in Philippine and does not cover her position. What are the returns on funds invested for Noah and Mia respectively? What conclusions/comments related to IRP and/or IFE can you make from Noahs return and Mias return respectively? (Hint: You can get the exchange rate between Philippine peso and Thai baht from their respective rate to USD.) ANS: Please clearly label your return calculations, i.e., the investment return for Noah and Mia respectively.